Cost-cutting, higher admissions help Tenet post smaller loss

Published 6:00 pm, Monday, February 25, 2008

The company offered earnings guidance for this year that was better than Wall Street's consensus estimate, and its shares rose more than 11 percent in morning trading.

The Dallas-based company posted a loss of $75 million, or 16 cents per share, for the three months ended Dec. 31 versus a loss of $386 million, or 82 cents per share, a year ago. Losses from continuing operations totaled $86 million, or 18 cents per share.

Revenue rose 6 percent to $2.25 billion from $2.12 billion.

Analysts polled by Thomson Financial forecast a loss of 3 cents per share on $2.24 billion in revenue.

Tenet said admissions rose 2.3 percent in January and have increased in February. Chief Executive Trevor Fetter called the increases "a major milestone in executing our turnaround."

However, Tenet is still losing patients in private managed-care insurance programs, and it's taking on more uninsured patients _ 10 percent more than a year earlier. As a result, provisions for bad debt _ accounts that are unlikely to be collected _ rose 12.8 percent.

The company has been plagued by falling admissions for several years as many doctors sent their patients to other providers. To reverse the trend, the company has raised spending on equipment and aggressively courted doctors, boosting the number of physicians on its hospital admitting staffs 2 percent in the fourth quarter.

The company said it expects 2008 results will range from a loss of 3 cents per share to profit of 6 cents per share. That outlook depends on increasing patient loads. Wall Street predicts a loss of 5 cents per share.

For all of 2007, Tenet said it lost $89 million, or 19 cents per share, down from a loss of $803 million, or $1.71 per share in 2006. Revenue rose 4.7 percent, to $8.85 billion from $8.45 billion in 2006.